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With more companies delivering convenient, affordable options to employees and the general population, health care organizations will need to change and adapt.

Innovation and disruption

Giants at the Gate? Walmart, Amazon, CVS Move Further Into Health Care

  • Jennifer Boese
  • 10/15/2019

Like everyone else, I’ve been keenly interested in how large companies like Amazon and CVS are making their way into the health care market. If you’re skeptical, I get it — but we are in a different time and space than back when these businesses first entered the scene.

Industry challenges invite new competitors

Consider the toll of health care costs. They continue to increase, placing strain on everyone. Medicare spent over $740 billion in 2018 alone, and 71 million Baby Boomers are now moving into the program. Overall, health care costs are projected to increase to some $6 trillion (yes, that’s with a “T”) by 2027, equaling almost 20% of the Gross Domestic Product (GDP).

In addition to putting a strain on the federal budget and employers, medical bankruptcies and financial toxicity are very real issues impacting real people.

Take generational differences. The Silent Generation currently in Medicare views many things, including health care, in vastly different ways than the younger generations (Gen X, Millennials, and Gen Z). For example, 45% of 18 to 29-year olds have no primary-care provider compared to 28% of those 30 to 49, 18% of those 50 to 64, and 12% of people aged 65 and older.

Take technology differences. The younger generations have all grown up in tech-enabled worlds where access to goods, services, and information is always available. While Baby Boomers are engaging more with technology, they still have lower levels of adoption than subsequent generations. Even more, younger generations may not simply desire tech-enabled options from health care, but may demand those options be available. Add these generational differences to the exponential rate of tech innovations, and the future looks different.

Since the younger generations have fewer health-related issues, perhaps there is also a view of health care as more transactional at this stage of their lives as opposed to relational.

Telehealth and virtual health care are becoming a necessity for providers in order to even compete. And even those options may be considered old-school tech compared to the innovations we will see emerge from Artificial Intelligence, genomics and precision medicine, blockchain applications, and beyond. These inventions are leading to new discoveries, new processes, and new care delivery pathways.

Giants at the health care gate

Businesses like Walmart, Amazon, CVS, and Sam’s Club see these same dynamics. And with their size and scale, abilities, resources, and innovation mindsets, they believe they can deliver more convenient and affordable options than what’s currently available.


The company just launched Amazon Care for certain employees. The new package allows for the following:

  • Care Chat — Text with a nurse for answers to health care questions
  • Video Care — Video visits with physicians or nurse practitioners
  • Mobile Care — House calls to employee's home or office
  • Care Courier — Your meds delivered to your home or office

Don’t forget that in 2018 Amazon purchased PillPack, an online pharmacy, and is partnering with JP Morgan Chase and Berkshire Hathaway (“Haven”) to build out other health care options. Initially, Haven is targeted at their employees, but many believe if Haven sees any promise at all, it will rapidly expand into the larger consumer market.

Walmart and Sam’s Club

For years, Walmart has used Centers of Excellence (COEs) to provide care to their employees. COEs are hospitals selected by Walmart to perform certain surgeries. The company selects only those with high-quality, cost-efficient track records. For example, Cleveland Clinic is one of the hospitals used for cardiac procedures. Mayo Clinic is used for cancers, and Geisinger Medical Center for weight loss surgery. Other surgeries included in the COEs are spine, hips, knees, organ, and other transplants. Surgery and medical services plus travel costs are covered for employees.

Walmart has even moved beyond its own employees into the consumer market. In September 2019, it opened its prototype Walmart Health, a 10,000 square foot space in Dallas, Georgia that provides primary care, mental health, and dental health care. The company already has smaller clinics in close to two dozen locations nationally.

Walmart’s sister store, Sam’s Club, is also offering new options for consumers under its Care Accelerator partnership with Humana and 98point6. Consumers can select from four packages of services ranging from $50 to $240 a year. All packages offer certain generics for free, $1 virtual visits or savings on dental visits, prepaid health debit cards, and $60 eye exams. As the package cost increases, options for free preventative screenings and higher prepaid debit cards are added, plus both virtual visits and dental visit savings are included.


Like Walmart, CVS has gone full bore into retail care via its Health Hubs, which are large store spaces designed to expand upon what they already provide in their MinuteClinics. These Health Hubs offer chronic disease management, other primary health care services, and diagnosis and treatment of minor illnesses and injuries. Costs for the services are listed (i.e., price transparency) and begin at $35. Evening hours and weekends are available.

There are other market moves from Best Buy, Walgreens, and more, but I think you see the trend.

What does this mean for the industry?

I think these moves mean business as usual for health care will not be enough long term. These companies see a large consumer market, including their own employees, that they can tap into. For years they’ve been watching, more or less from the sidelines, as a highly complex health care coverage and pricing system continues to challenge the nation. They see health care costs increasing for their employees and for the public at large and know consumers are placing importance on convenience, technology and a satisfying experience. And these companies are innovative in technology and logistics, and have scale, resources, and expertise with the consumer market. They are willing to try again at providing certain aspects of health care.

Here are a few potential implications:

  • New competitors for urgent care and primary care services. Hospital urgent care, outpatient clinics, and physician office clinics may be bypassed for more convenient virtual or in-store options. Don’t forget that these companies are competing with each other as well.
  • New competitors for pharmacy and medical supplies. Products and drugs can be purchased via the web without the need to visit the local pharmacy.
  • New access points for care. With thousands of locations nationally, these companies could provide new access points. Again, this may result in bypassing nearby hospitals or clinics, or it may fill voids where primary care, behavioral health, or dental needs are left unmet. Keep in mind new access points also include health care delivered virtually and at home.
  • Increased convenience and affordability. New access points plus new virtual and digital options provide meaningful alternatives for consumers to consider when purchasing supplies or receiving care. From disease management, video visits, and immunizations, to a rapid strep test for a sick child, all can potentially be provided around the corner at CVS with no hassle, little wait time, and at an easily understandable, pre-set cost.
  • Potential to build current customer base and create added alignment to their brands and stores. By building out their current slate of products or services, these companies can reinforce their brands. For example, CVS changed its name a few years ago to CVS Health. Providing more health care-related options reinforces their mission, their strategy and, if done well, their customer base.

What can health care organizations do?

Will these giants at the gate take over health care? No, but that’s not the point. The point is they are trying to change the playing field, and doing so creates a threat to a costly, infrastructure-heavy health care system. The point is there is growing frustration with certain aspects of health care and new options may offer attractive alternatives. The point is if these companies can push into the health care market even a little, it will impact incumbents’ financial health long-term.

So what are incumbents to do when faced with these shifts? Here are a few ideas:

  • Strategically assess your local market(s) for new entrants (or other competitors) and determine how to respond. 
  • Ensure your organization is monitoring technology and demographic shifts regularly. While technology creates new competitors, it also creates new markets. 
  • Evaluate ways you can tap into emerging trends. What is your digital health strategy long-term? How do generational shifts look in your market(s)?
  • Focus on aspects where you excel. For example, are there opportunities to be a COE for local, regional, or even national employers? Are there other ways you can engage with employers or directly with consumers through unique offerings?
  • Build brand loyalty based on excellence in care, a consumer-focused mindset, convenience, and affordable health care options. Eliminate or mitigate aspects that frustrate the consumer experience and, thereby, reduce brand loyalty.
  • Assess your revenue cycle from an internal and financial perspective, but also from the patient’s perspective. Remember, consumers also engage with your organization through the revenue cycle, not solely clinically.
  • Consider partnerships, affiliations, joint ventures, or mergers if those would benefit your organization. These could be with other health care organizations or with non-traditional entities.
  • Be a strong, local partner in your community. National brands are just that: national. Health care is often viewed as local. Capitalize on that strength and commitment.

How we can help

There are a lot of changes occurring in health care, including these market moves. The most successful health care organizations are always assessing, adjusting strategies, and innovating. Whether you’re looking to explore new capabilities, or improve your current offerings, CLA can help you explore the opportunities that are emerging as the health care market evolves.